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Bank profitability determinants: comparing the United States, Nigeria and South Africa

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  • Ozili, Peterson

Abstract

This study investigates the determinants of banking sector profitability in South Africa, Nigeria and the United States. The findings reveal that cost efficiency, the size of non-performing loans and overhead cost ratio are significant determinants of the banking sector profitability. In the comparative analysis, the findings from South Africa show that the cost efficiency ratio, overhead cost to total asset ratio and non-performing loans are significant determinants of banking sector profitability. In the United States, capital adequacy ratio and the size of non-performing loans are significant determinants of banking sector profitability. In Nigeria, the overhead cost to total asset ratio and cost efficiency ratio are significant determinants of the banking sector profitability. The descriptive analysis reveal that bank net interest margin and return on asset are higher in Nigeria and lowest in the United States which suggests that the Nigerian banking sector is more profitable than the US banking sector. Return on equity is higher in South Africa and lowest in the United States.

Suggested Citation

  • Ozili, Peterson, 2021. "Bank profitability determinants: comparing the United States, Nigeria and South Africa," MPRA Paper 105638, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:105638
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    References listed on IDEAS

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    11. Ozili, Peterson K & Uadiale, Olayinka, 2017. "Ownership Concentration and Bank Profitability," MPRA Paper 102571, University Library of Munich, Germany.
    12. Nesrine Ammar & Adel Boughrara, 2019. "The impact of revenue diversification on bank profitability and risk: evidence from MENA banking industry," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 12(1), pages 36-70, January.
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    Cited by:

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    2. Davis, E Philip & Ali Abdilahi, Ridwa, 2022. "Econometric Analysis of the Determinants of Bank Profitability in Three Major African Counties: Kenya, Nigeria and South Africa," National Institute of Economic and Social Research (NIESR) Discussion Papers 536, National Institute of Economic and Social Research.

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    More about this item

    Keywords

    banks; profitability; non-performing loans; efficiency; Nigeria; South Africa; United States.;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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